I always wondered would MS do something like this. Make a new Zune based off WP7 which can run all the same apps.

I'd consider it *very* unlikely at this point given how much the MP3 player market has been in decline. A Windows Phone is more or less a Zune with a phone in it in so many ways anyways. They would be far better off just bringing any missing Zune features to Windows Phone 8.

PerfectPhase"This is not war, this is pest control!" - Dalek to Cyberman

@battlebottle: I still think that there is a niche in the market for a device with no contract and many days of battery life. Is it worth's MS's time to create a new device I'm not sure, but if WP8/W8RT can live up to it's promises of shared core, shared hardware drives, much more reuse it might be a much easier undertaking.

I'm all for Zune but it has a small marketshare compared to other players, and then on top of that it has to target a diminishing overall player marketshare? That doesn't make any sense when you consider it takes just as much R&D resources to develop such a player whether it sells a few or a lot.

PerfectPhase basically told you why. "For cheap" is not all that possible for a WP7.8 device, especially if you don't want a carrier and data plan contract tied to it.

I think it would be very smart of Microsoft to create such a device (again). More importantly, it would make sense to also license the OS to OEMs to create their own devices. Base it off WP8 and include everything but support for phone hardware in it. Basically equivalent to Apple's iPod Touch. This may be a declining market, but it's still a significant market, and one that ties well into the full ecosystem of consumer devices that Microsoft is building.

But, it won't be called Zune. The Zune brand is dead, and there would be nothing worse that Microsoft could do then to try and bring it back now.

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